New Home Sales jumped 18 percent- a big turn from other, much weaker information about the sector released in the past few days. Bobbi Rebell reports.
It looked like a home run at first glance. New home sales jumped 18 percent to a seasonally adjusted annual rate of 504,000 units in August, the highest level since May 2008. But not so fast says IHS Global Insight's Patrick Newport: SOUNDBITE: PATRICK NEWPORT, U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "Those were amazing numbers. I don't believe them, because they are not in sync with the other numbers that have come out recently. They have new home numbers that are not well measured. 504,000 plus or minus 90,000. I think it's a bad reading." And in fact, some data does point the other way. Builder KB home- said it made less money last quarter-because fewer people bought their homes. Overall in the U.S., the inventory of new houses on the market hit its highest level since January of 2008- reflecting a lack of demand. Existing home sales, which make up more than 90 percent of the housing market, just this week came in weaker than forecasts. And also mortgage applications fell last week. Fordham finance professor Laura Gonzalez: SOUNDBITE: LAURA GONZALEZ, ASSISTANT PROFESSOR OF FINANCE AND BUSINESS, FORDHAM UNIVERSITY (ENGLISH) SAYING: "The problem that we have now is a real estate market that is indecisive for the most part. Sometimes, the short term results are good, then in the next quarter they are weak. So there is no clear growth pattern in the housing market because there is no clear strong solid sustainable growth pattern in the economy." And that's making for a different balance of power in this economic comeback. SOUNDBITE: PATRICK NEWPORT, U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "Housing, of course, is going to continue to grow, to continue to add to growth. But in previous recoveries it's been the big driver for growth over a short period of time. We think it's going to drive growth but it's going to drive it over three or four years instead of one or two, which means that the climb to full employment is going to take longer than anyone has been anticipating." Pushing home buying for many- more into the future.